Retail Is a Vicious Minefield

 | Dec 04, 2013 | 8:35 AM EST
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Express (EXPR)? Say it ain't so. This terrific chain of 630 stores has delivered and delivered and delivered. It sure didn't deliver today, and the company was abject when Michael Weiss, one of the best merchants out there, said, "Results did not meet our expectations."

This one's shocking. I have come to think of Express as that terrific mid-range player with the best duds for younger professionals. The company is right when it claims itself to be the "premier fashion authority for our demographic." Express is too good for me to be thinking that it screwed up this badly. To me it says the demographic isn't spending.

This report is a remarkable affirmation of just how impossible retail is to invest in right now. As consistent as Express has been of late, Ascena (ASNA) has been inconsistent. The umbrella company for Dress Barn, Maurices and Justice had been like the old chain of woman retail fashion, Hit or Miss, especially since it bought Charming Shoppes not that long ago.

Sure enough, this quarter the acquisition paid off for Ascena, and while things aren't perfect, since it reported the stock is now up as much as Express is down. David Jaffe, one of my favorite retail CEOs, vindicated himself and his chain with this quarter as much as Weiss did the opposite.

We have seen schism after schism in the group, with the dichotomy best represented by the de-coupling of Ross Stores (ROST) -- downgraded today by Credit Suisse -- from TJX (TJX). Both have been ideal mid-ranged discounters with an off-the-rack feel. This quarter, though, TJX became the ultimate close-out play, buying product hand over fist from lagging retailers. Plus, it has two terrific kickers: Home Goods, a cheaper version of the red hot Williams-Sonoma (WSM), and a growing European operation that never went bad during the hard times and is now thriving. Ross, on the other hand, seems to have the wrong merchandise, and shareholders can only hope that the stock hasn't topped out.

Six months ago Urban Outfitters (URBN) was a darling, with Free People -- and, again, Williams Sonoma analogue Anthropologie -- leading the way. Now, though, it's looking like a failed turnaround play, with its flagship store, Urban, faltering badly.

Heck, we have retailers split month to month. J.C. Penney (JCP) was bad, but now it's good. Gap (GPS) was bad, now it's good. Sears (SHLD) is good, now it's bad -- or, at least, the restless, redeeming limited partners of Eddie Lampert's hedge fund might be thinking it is bad, as they are voting with their feet.

Oh and let's not forget that Wal-Mart (WMT), Target (TGT) and Kohl's (KSS) are missing badly while Costco (COST) is hitting it out of the park. Meanwhile Amazon (AMZN), well, is Amazon, meaning it's amazing.

The conundrum extends to hard goods: GameStop (GME) and Best Buy (BBY) seem to have run out of gas. But have they? GameStop de-risked itself with lowered expectations, but the stock has kept going down since then. Best Buy feels over-recommended. Is there really anyone left to recommend?

It's just a vicious minefield, and I don't know anyone who has been able to navigate it.

Perhaps the best thing to do is to just stay away from the darned thing until we get some clarity.

That is if there is any clarity to be had.

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